How the 2027 cap works
The Inflation Reduction Act replaced the old coverage stages with a hard yearly limit starting in 2025. Medicare describes three stages:
- Deductible. If your plan has one, you pay the full cost of covered drugs until you meet it. No plan can set a 2027 deductible above $700, and some have none.
- Initial coverage. You pay your plan's copays or coinsurance for covered drugs until your out-of-pocket spending reaches the cap.
- Catastrophic coverage. When your out-of-pocket spending on covered Part D drugs reaches $2,400, you move here automatically and pay nothing more for covered Part D drugs until December 31.
Your monthly Explanation of Benefits shows how close you are. CMS sets the cap each year; the 2027 amount is in its CY 2027 Rate Announcement, published in April 2026.
What counts, and what doesn't
| Counts toward the cap | Doesn't count |
|---|---|
| Your deductible, copays and coinsurance for drugs on your plan's formulary (including approved exceptions) | Monthly premiums and any Part D late penalty |
| Certain payments made for you, such as Extra Help or an AIDS Drug Assistance Program | Drugs your plan doesn't cover, or drugs bought with a discount card instead of your plan |
| Costs billed to you through the Medicare Prescription Payment Plan | Part B drugs, such as many infusions and eye injections |
| The Medicare GLP-1 Bridge copay for weight-management drugs |
Insulin has its own protection: each covered insulin costs no more than $35 for a one-month supply, with no deductible, and what you pay still counts toward the cap.
What it means in North Carolina
All 11 standalone Part D plans sold in North Carolina for 2027, and every Medicare Advantage plan with drug coverage, have the same $2,400 limit; plans can't set a higher one. Plans still differ in which drugs they cover and how much you pay before you reach it, which is why the formulary matters more than the cap when you compare. State Health Plan retirees in the Base Plan or Enhanced Plan get Part D through those group plans, so the cap applies there too.
If you take a high-cost specialty drug, you may hit the cap in the first months of the year; the Medicare Prescription Payment Plan lets you spread those costs over monthly bills. Try the drug cap calculator, or compare plans for your drugs on PlanMatch. You can also request a call from a licensed insurance agent.
Related questions
Is there still a Medicare donut hole?
What replaced the coverage gap.
What is the Medicare Prescription Payment Plan?
Monthly bills instead of big pharmacy charges.
How many Part D plans are in North Carolina for 2027?
The state's 2027 plan count.
Sources
- CMS — CY 2027 Rate Announcement (2027 Part D deductible and out-of-pocket threshold)
- Medicare.gov — How much does Medicare drug coverage cost?
- Medicare — Your Guide to Medicare Drug Coverage (SPAP and ADAP payments toward the cap)
- Medicare.gov — Medicare Prescription Payment Plan
- CMS — Medicare GLP-1 Bridge (copay outside the Part D benefit)
- Medicare.gov — Insulin
- NCDHHS Division of Public Health — HIV Medication Assistance Program (HMAP)
More questions in this guide
- Does North Carolina have a prescription assistance program for seniors?
- How many Part D plans are available in North Carolina for 2027?
- Is there still a donut hole in Medicare Part D?
- What is the Medicare Prescription Payment Plan?
- Which drugs have Medicare negotiated prices for 2027?
Part of the guide: Medicare Part D in North Carolina · All questions
Frequently asked questions
Does my premium count toward the Part D cap?
No. Monthly premiums, including any late enrollment penalty or income-related amount, never count toward the $2,400 cap. Only what you pay for covered Part D drugs counts.
Does the Medicare Advantage out-of-pocket maximum include drugs?
No. A Medicare Advantage plan's yearly maximum covers Part A and Part B services. Its Part D drug coverage has its own separate $2,400 cap in 2027.
Does the cap reset every year?
Yes. It resets on January 1. If you reach it in 2026, you start over in 2027, and the cap amount is adjusted each year.
Does help from North Carolina's HIV Medication Assistance Program count toward the cap?
Yes. Medicare says payments from an AIDS Drug Assistance Program, which is what the HIV Medication Assistance Program (HMAP) is, count toward your Part D out-of-pocket cap, as do Extra Help payments.
Medicare in your North Carolina county
Plans, local agents and help, county by county: Wake · Mecklenburg · Guilford · Forsyth · Durham · Cumberland · Buncombe · Union · Johnston · Cabarrus · New Hanover · Gaston · Onslow · Iredell · Alamance · Pitt · Davidson · Brunswick · Catawba · Rowan · All 100 counties →
